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House price growth slowed annually in 2018, Zoopla reveals

House price growth across UK cities reduced steadily throughout 2018, according to new analysis carried out as part of Zoopla’s UK Cities House Price Index.

This slowdown was driven by price falls in London (-0.2%) and Cambridge (-3.8%), with the rate of growth reducing noticeably across southern cities.

By contrast, cities in Wales, Scotland, the Midlands and the North of England led the way for annual growth, with the average price in Edinburgh up 6.8% annually, 6.3% up in Liverpool and 5.9% up in Birmingham, Nottingham and Cardiff.

Zoopla’s latest index shows that there is a clear North-South divide when it comes to house price growth, with the 13 cities in its ‘20 cities index’ posting the highest growth all located in the North, Scotland, the Midlands or Wales (the only exception to this was Bristol in the South West).

Other than Aberdeen (where the housing market has been badly hit by flagging oil prices), the ‘bottom seven’ cities were all in the South or East of England.

The index also included brand new analysis based on Zoopla splitting the recent housing market cycle into three phases: early recovery (2009-2012), broad recovery (2013-mid-2016) and post-Brexit vote (mid-2016-end-2018).

Ten cities have recorded double digit growth since the result of the referendum was revealed in June 2016, with Birmingham (+16%) and Manchester (+15%) leading the charge. All cities posting double digit growth since 2016 were Scottish, Welsh, from the North of England or located in the Midlands (Bristol, once again, was the exception).

The leaders in the broad recovery phase (London, Oxford and Cambridge) are now amongst the very poorest market performers in the post-Brexit era. What’s more, southern cities which over-performed during the broad recovery phase are now experiencing significantly decelerated growth, as economic and political uncertainty is more acutely felt here.

“Weaker growth in London, Cambridge and Aberdeen has been a large drag on the headline rate of house price growth across the UK cities index over the last year,” Richard Donnell, research and insight director at Zoopla, said.

“House prices in London have been falling for almost 12 months while the rate of growth has slowed across cities in southern England, a result of growing affordability pressures, higher transaction costs and increased uncertainty.   

He said the strongest performing cities are outside south eastern England where ‘affordability remains attractive and employment levels are rising’.

“We expect current trends in price growth to continue across the rest of this year, with prices rising in line with earnings for much of the UK but lower growth and some house prices falls in London and the South,” he added.

“London will continue to register price falls, concentrated in inner London where prices have grown the most over the last decade. Prices continue to increase slowly in the more affordable outer and commuter areas of London.”

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